The public sector workforce in the UK faces a number of challenges and pressures that are leading to an increasing fragmentation of employment. This paper reports evidence of one such pressure faced by nursing staff in the NHS – the recruitment of a new grade of unqualified nurse, the ‘health care assistant’ (HCA), onto local terms and conditions of employment. Drawing on case-study evidence, including pay data from a sample of nursing personnel records from two Trusts, this paper addresses two central issues. First, the recruitment of growing numbers of HCAs may increase wage inequality among nurses as managers are able to adapt local pay scales to the widening wage inequality external to the organisation. Second, the greater managerial autonomy associated with hiring HCAs on local pay scales may increase opportunities for managers to reassess traditional demarcations between qualified and unqualified nursing staff and to seek cost reductions through reducing the proportion of qualified staff employed.